Srinagar: The High Court of J&K & Ladakh has ruled that a complaint of dishonour of cheque is maintainable even if the cheque had bounced due to the freezing of the drawers’ bank account.
Justice Rajnesh Oswal while hearing the case titled Sheikh Owais Tariq versus Satvir Singh held “the complaint under section 138 of the Negotiable Instruments (NI) Act is maintainable even if the cheque is dishonoured due to reason Account frozen”.
The petitioner had filed a complainant before the 3rd Additional Munsiff Magistrate Srinagar in 2014 alleging that the respondent owed him an amount of Rs 8, 69,700. The respondent issued him a cheque on July 1, 2014 which was drawn on Axis Bank Limited.
The cheque was dishonoured by the banker of the respondent on July 14, 2014 with the endorsement ‘Account Frozen’.
A complaint under section 138 of the NI Act was accordingly filed against the respondent.
Trial court issued the process against the respondent for commission of offence under the Act on August 23, 2014.
The respondent filed an application for dropping of the proceedings on the ground that the complaint for dishonour of cheque due to frozen account, does not fall within the ambit of the Act.
The petitioner responded saying “the Magistrate has no power to drop the proceedings”.
It was also alleged that the respondent on his own got the account frozen in order to obtain huge gain for himself and cause wrongful loss to the petitioner.
The accused contended that the cheque was dishonoured due to circumstances beyond his control.
The court dismissed the application by virtue of order dated on November 4, 2017. It said “as the court has already taken cognizance, the application for dropping of proceedings was not maintainable”.
The respondent assailed the order of 2017 and also order dated August 2014 whereby the process was issued against the respondent before the Revisional Court (session’s court).
The Revisional Court in May 2018 set aside the orders of August 2014 and that of the 2017 resulting in dismissal of the complaint.
Aggrieved, the complainant filed a petition before the High Court.
Justice Rajnesh Oswal after hearing the case concluded “the finding returned by the Revisional Court that the trial court has wrongly dismissed the application for dropping of proceedings in the complaint filed by the petitioner, is contrary to the settled proposition of the law”.
It said the Revisional Court has put the cart before the horse and has returned a finding which could have been returned only after the full-fledged trial.
He recorded “once the Magistrate takes the cognizance and issues the process against the accused, then he cannot put the clock back and drop the proceedings at the behest of the accused because there is no such provision in the Code of Criminal Procedure, permitting the Magistrate to recall his order, whereby he has taken the cognizance and issued process against the accused”.
The bench acknowledged that Section 138 of the NI Act only provides two contingencies when a cheque bounce complaint can be filed. Either the account has insufficient funds or it exceeds the amount arranged to be paid from the account by an agreement made with the bank.
Similarly, under Section 138 of NI Act a complaint can also be filed if the cheque bounces because of the drawer’s account being frozen, it said.
It set aside the order of the Revisional Court and restored the order of the trial besides remanding the matter back to it for trial.
